Oyo’s parent company, PRISM (formerly Oravel Stays), has walked back its complex bonus share proposal after it faced intense scrutiny from investors and governance experts. The company has now promised a simplified, inclusive, and automatic bonus issue that covers all shareholders — a move that marks a significant course correction for one of India’s most-watched startups.
Credits: Mint
A Bonus Plan That Raised Eyebrows
PRISM’s now-withdrawn plan was anything but conventional. Instead of a standard, across-the-board bonus issue, the company had introduced a conditional structure linking shareholder rewards to both a time-bound opt-in process and the company’s progress toward its much-anticipated IPO.
Under the earlier proposal, shareholders were to receive one Bonus Compulsorily Convertible Preference Share (CCPS) for every 6,000 equity shares held — meaning smaller investors holding fewer than 6,000 shares would not receive any bonus at all.
What followed was a two-tier system based on shareholder actions:
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Class A: Those who did not take any action would receive one equity share per CCPS — essentially one bonus share for every 6,000 held.
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Class B: Those who actively opted in during the narrow election window could receive 1,109 equity shares per CCPS if Oyo appointed merchant bankers for its IPO before March 2026. If the milestone was not achieved, however, the conversion dropped drastically to 0.10 share per CCPS.
This unusual design blurred the line between a corporate reward and a contingent investment bet, sparking confusion and debate across investor circles.
The Company’s Rationale
According to people aware of PRISM’s internal thinking, the company had intended the plan to reward long-term shareholders who had remained invested through Oyo’s pre-IPO phase. It was positioned as a goodwill gesture to align loyal investors with the company’s next phase of growth rather than a move to alter ownership patterns.
The logic was clear: those who believed in Oyo’s long-term journey — and demonstrated that belief through active participation — would share more generously in future value creation. But what was meant as an innovative incentive quickly became a lightning rod for criticism.
Investor Backlash and Growing Discontent
Shareholders raised concerns over the tight deadlines, complex procedures, and eligibility restrictions. Many argued that the structure disadvantaged smaller investors, who might miss the election window or struggle with the required paperwork.
In response to the outcry, PRISM took several corrective steps: extending the election window to November 7, 2025, eliminating the need to submit a Client Master List (CML), and creating a dedicated query channel for investors.
The company also clarified that only equity shareholders were eligible — excluding preference shareholders such as founder Ritesh Agarwal and SoftBank Vision Fund, both of whom hold large stakes in the company through preference instruments.
Despite these changes, experts and minority investors remained unconvinced. The plan’s two-class structure continued to raise questions of fairness, with some suggesting it created a system where resourceful investors could gain disproportionate rewards simply by navigating the process more efficiently.
The Numbers Behind the Controversy
The potential reward gap between Class A and Class B shareholders was staggering. For instance, a holder of three lakh shares would have received just 50 bonus shares under Class A — worth around ₹1,300 based on Oyo’s implied valuation. But under Class B, that same shareholder could have received over 55,000 shares, valued at nearly ₹14.4 lakh if the IPO milestone was achieved.
Such a vast disparity, critics argued, undermined the spirit of equal shareholder treatment — a cornerstone of sound corporate governance.
A Reset in Motion
Facing sustained scrutiny, PRISM has now withdrawn the resolution altogether and pledged to introduce a new, straightforward bonus plan.
In its statement, the company confirmed that the upcoming proposal will automatically cover all shareholders — both equity and preference holders — without any opt-in requirement or election window. The move, it said, was designed to ensure “fairness, transparency, and equal opportunity” for all investors.
The revised structure is expected to be presented for shareholder approval in the coming days, reflecting PRISM’s efforts to rebuild confidence and reaffirm its commitment to strong governance standards.
Credits: Inc42
From Complication to Clarity
By scrapping the original scheme, PRISM appears to have learned an important lesson: complexity doesn’t always inspire confidence. What began as an innovative experiment in shareholder engagement has instead reinforced the value of simplicity and equality in corporate actions.
As the company prepares for Oyo’s long-awaited IPO, this episode could serve as a turning point — a reminder that the road to public markets demands not just growth and ambition, but also clarity, trust, and fairness at every step.
